RALEIGH — A Raleigh businessman is one of two people charged in a 10-count federal indictment unsealed Monday that says the pair cheated investors out of at least $80 million through a Ponzi scheme that fell apart last year.
Vance Moore II of Raleigh was arrested Friday afternoon in Garner, the U.S. Attorney's Office in New York City said in a press release. Moore's family operates a business in Garner and in Leesburg, Fla., called Best Lab Deals Inc. A spokeswoman for the U.S. attorney said Moore was arrested at his office. He is scheduled to appear in federal court in Raleigh this morning.
Moore's attorney, Stuart Abrams of New York, did not return phone calls Monday.
His co-defendant in the case, Walter Netschi, 62, of McKinney, Texas, surrendered in New York on Monday.
Both are charged with nine counts of wire fraud and one count of conspiracy to commit wire fraud.
The indictment says the two worked together to persuade investors to buy automated teller machines to be placed in convenience stores, shopping centers, hotels and other locations around the country. Investors were to earn monthly income from fees charged to users of the machines.
The indictment says Moore, Netschi and others led investors to believe they had as many as 4,000 machines in place. In fact, investigators say, they had only about 400, and they relied on money from new investors to pay dividends to existing ones.
FBI Assistant Director-in-Charge Joseph M. Demarest Jr. described the arrangement as a classic Ponzi scheme, with phantom revenue coming from new investors rather than ATM fees.
"The scheme itself, until discovered, was one giant cash machine," Demarest said in the press release.
The indictment does not detail where the money went, but it says Moore and Netschi used some of it for "their own personal expenses, among other things."
Investigators say the scheme began in 2005 and worked like this: Through one of his companies, Netschi would sell individual ATMs or groups of machines to investors. The investors would then enter into agreements with Moore's company, ATM Financial Services, to process, operate and maintain the machines.
To read the complete article, visit www.newsobserver.com.